VAT is a complex tax and rates can depend on the product or service being sold or claimed. As a result many businesses struggle to navigate its latest rules.
Our VAT specialists help you remain current with your VAT obligations and ensure you don’t pay more tax than you need to.
We have many years of experience helping businesses meet their VAT obligations. Here are some examples but do get in touch with one of the team if you have a specific question.
VAT registration
Registration is a key component of the UK VAT system and is an area of compliance that our experienced team deals with on a regular basis.
Anyone conducting a business activity should consider whether or not to register for VAT. The three main reasons for registering are if:
- turnover from taxable supplies exceeds the threshold, in which case registration is compulsory
- turnover is less than the threshold, but it is nevertheless desirable to register in order to recover VAT on costs, facilitate dealings with suppliers or enhance the reputation of the business
- the business has not started to trade but wants to recover VAT on the costs of setting up.
VAT registration is a formal and strictly controlled process in the UK and is much less straightforward than it appears. There is also an expensive and fairly inflexible penalty regime for failing to register at the right time.
So, although registration ought to be a simple exercise, it can prove to be time-consuming and costly.
Our team of VAT Specialists have helped hundreds of businesses register for VAT, and we can provide as little or as much help as you need.
VAT simplification schemes
Once a business is registered for VAT it has a number of obligations, such as filing VAT returns and keeping records.
We can help make this easier by advising on simplification schemes such as:
- the flat rate scheme
- cash accounting
- annual accounting.
Our team can guide you through the maze of schemes and eligibility criteria to match you with the right scheme(s) to suit your circumstances.
Other VAT schemes
There are a number of other VAT schemes that may affect your business. The scope of these schemes may be wider than their names suggest. Furthermore, some are mandatory, while others are highly desirable to reduce the overall VAT payable. Expert advice is therefore essential.
The main schemes are:
- Tour Operators Margin Scheme (TOMS)
- margin schemes for second-hand goods, works of art, antiques and similar
- domestic reverse charge accounting scheme that covers such things as computers, computer chips and mobile phones
- partial exemption
- Capital Goods Scheme
- option to tax in respect of commercial real estate
- flat rate scheme for farmers
- self-billing.
For the most part, VAT is a business matter and of little interest to individuals other than the self-employed, but not exclusively so. For example, some people can benefit from reliefs such as the DIY builder scheme or VAT reductions for the disabled.
Complex rules, inflexible penalty regimes, and strict record-keeping requirements are common features of all these schemes. Our VAT team can advise on all aspects of these schemes and help guide you through the complexities.
Compliance and penalties
Complying with the VAT regime is not easy and it bristles with penalty provisions designed to encourage ‘good behaviour’. Once a business is caught up in the penalty regime, things can quickly spiral out of control.
Whatever your situation, we can help you avoid:
- late registration penalties, which can be as high as 100%
- a misdeclaration penalty of up to100% for getting the figures on the VAT return wrong
- surcharges of between 2% and 15% for failing to file returns and pay VAT on time.
In addition, HM Revenue & Customs (HMRC) will levy interest if you owe money, but is rarely required to pay interest if money is owed to you.
High-quality advice and assistance are essential to avoid getting caught by penalties or to improve compliance in order to get out of the penalty regime. Our wide VAT knowledge and experience in dealing with accounting systems and negotiating with the VAT man can be invaluable.
Making Tax Digital for VAT
Making Tax Digital (MTD) is a long-held Government ambition to create an online tax filing and payment system. It also hopes to stimulate a migration to digital record keeping. Long-term, it’s intended all business taxes will be part of MTD.
The Making Tax Digital Programme launched in April 2019 with its first scheme – Making Tax Digital for VAT. To aid a smooth adoption, the Government introduced a gradual phasing in of eligible businesses. Compliance with Making Tax Digital for VAT requires a business to keep digital records and use MTD-compliant software to file their VAT returns. Since 1 April 2022, all VAT registered business must follow the rules for Making Tax Digital for VAT.
Our specialist VAT team have helped many businesses migrate to digital record keeping and comply with Making Tax Digital for VAT. We can also advise you if you qualify for any exemptions.
Trading or importing from Europe and other parts of the world
Since Brexit, UK businesses that trade overseas or ship products from overseas have faced more complex VAT-related regulations. We can advise on the regulations your business needs to comply with in relation to the territories, products, and services involved in your operations. We also help businesses establish subsidiaries in the EU and other locations and appoint a fiscal representative to ensure they meet their VAT obligations in different territories.
Planning
There are a number of opportunities to arrange your affairs to minimise the amount of VAT payable or maximise the amount of VAT recoverable. These can be as simple as making use of the continuous supply rules to defer the date when VAT becomes due, or can be complex arrangements designed to achieve an absolute VAT saving.
Our VAT team includes a former HMRC anti-avoidance adviser, so it is well-placed to help guide you through the minefield that VAT planning activity has become in recent years.
VAT audits and health checks
Our experienced VAT team can help to streamline and review your VAT records to:
- improve compliance systems
- avoid penalties
- maximise input VAT recovery
- minimise output VAT errors.
Training and publications
If you simply want to learn more about VAT as it applies to your business, we can provide tailored training as well as copies of useful VAT publications.
We also keep you abreast of the latest developments via updates on our website and a regular column in our Shipshape magazines.
Can we help?
For many years, our specialist VAT team has supported clients across a wide range of business sectors. The team advises on everything from the basics of compliance to complex VAT planning.
We can also help answer your queries relating to excise, inland customs, import, export and intra-EU dispatch, and arrival procedures and formalities.
For further information, please talk to your usual Shipleys’ contact, or the specialists shown on this page.
Specific advice should be obtained before taking action, or refraining from taking action, on any of the subjects covered above.
Related Resources
VAT Update – Summer 2024
VAT Update – Spring 2024
The VAT Import One Stop Shop – online registration from 1 March 2024
The EU’s Carbon Border Adjustment Mechanism (CBAM)
E-commerce transactions with the EU – fresh VAT implications
Claiming back the VAT on employee expenses
HMRC offers online self-service VAT payment plan for certain businesses
